Trade responds to alcohol duty review delay

The Wine and Spirit Trade Association (WSTA) has welcomed the UK government’s delay of the alcohol duty review as a “sensible pause”.

In October 2021, UK chancellor Rishi Sunak revealed that the UK government intended to modernise the tax system for alcohol, which had been criticised for favouring beer.

In his October budget announcement, Sunak labelled the current alcohol duty structure as “outdated”, and said the government would slash the number of main duty rates from 15 to six, resulting in a new structure designed around the principle “the stronger the drink, the higher the rate”.

The structure proposed to “help end the era of cheap high-strength drinks” and allow “overtaxed” producers of lower-alcohol beverages to pay less.

At the time, Miles Beale, chief executive of trade body the Wine and Spirit Trade Association (WSTA), called the proposal a “missed opportunity” that was “definitely worse for wine, and not great for spirits”.

Yesterday (20 July), financial secretary to the treasury Lucy Frazer revealed that the government is currently considering feedback received on the alcohol duty reform, and will respond in the autumn. At present, the Conservative party, which commands the majority in the UK government, is currently in the process of electing its next leader after prime minister Boris Johnson announced he would be stepping down.

Trade body the WSTA welcomed the decision to halt the response to alcohol duty review.

Beale said: “The government’s plans to delay responding to the alcohol duty review until the autumn is a welcome and sensible pause. We look forward to engaging with the new chancellor and their Treasury team to ensure that plans for changing alcohol tax are fairer, simpler and are delivered with less red tape.

“With inflation continuing to climb to its highest rate for 40 years we hope that by working with the new Treasury team we can ensure that this once in a lifetime chance to reform the system does not add to consumer misery and bring with it higher prices and less consumer choice.”

The Scotch Whisky Association also praised the government’s decision to pause the alcohol duty review.

SWA director of strategy Graeme Littlejohn said: “The SWA has long called for fairer excise duty in the UK, but the reformed system announced by the Treasury last autumn actually increased the competitive disadvantage faced by Scotch whisky producers.

“The pause of the alcohol duty review will give the new chancellor and Treasury team time to reflect and ensure that the reformed system lives up to the promise to support the Scotch whisky industry.

“There is no reason why a unit of alcohol served as Scotch whisky should be taxed up to 245% more than a unit of alcohol served as cider. A unit is a unit, and consumers who choose to enjoy spirits like Scotch whisky responsibly should not be forced to pay over the odds.”

‘Time to act’

Meanwhile, Kate Nicholls, chief executive of trade body UK Hospitality, expressed disappointment at the plans to delay the alcohol duty review.

On Twitter, through UK Hospitality’s account, she shared: “This delay is incredibly disappointing for the pubs and hospitality. With the sector facing soaring costs, we needed to see positive action on lower duty rates for draught beer and cider.

“The new government must make this legislation (already agreed policy) a priority in early September so we can deliver benefits to pubs, the wider hospitality sector and crucially, consumers. The economic advantages are clear for the Treasury, so it is time to act.”